Benefits to Outsourcing Construction Accounting Functions & Technology
Dawn Meeker, Director, Marcum LLP
The ability to outsource construction accounting and technology services, including bookkeeping and business management has strengthened over the past five years, especially around software offerings.
It is a great solution for start-ups, and also for many small and midsized construction businesses regardless of growth stage that can’t afford in house departments.
Because many companies operate on leaner budgets, those that take advantage of the benefits of outsourcing your accounting and software functions increase your bottom line while having the expertise of knowledgeable professionals and use of superior accounting software at your disposal.
Outsourcing allows companies to automate transaction processing and back office operations using professionals and software that better establish, implement, and maintain quality processes organizational systems that support long term growth. Often this proves to be more cost-efficient and flexible, providing construction contractors with important increased visibility into the company’s overall performance on a real-time basis, all while allowing them to do what they do best - build.
Having trained and skilled professionals perform the functions and roles of transaction data entry (fostering improved accuracy), financial report generation and delivery (fostering visibility of the numbers), and using advanced cloud-based technology and data backup solutions (fostering high availability and security) allows contractors to keep your eyes on delivering your best product knowing the back office is being taken care of and your numbers are accurate and relevant.
Other benefits outsourcing include:
Meet your business’ unique accounting needs.
Make the most of “your” time.
Choose the right level of accounting support.
Position you for strategic growth around long term goals.
Meet Your Business’ Unique Accounting Needs
As a construction company, you need an accounting staff that understands construction accounting and possesses industry experience in order to meet your needs in an ever-changing environment. Construction accounting is a unique form of bookkeeping and financial management. It’s designed to help contractors track each job and show how it affects the company as a whole.
While it draws on all the same basic principles of accounting, it has several important and distinct features:
Tracking of detailed job cost for projects
Specialized construction billing
Contract revenue recognition
All of these features need to be in real-time, not just summarized at year-end. Real-time records support your banking and bonding needs, minimize your tax liabilities and help you monitor financial information in order to plan for the company’s success.
Make the Most of “Your” Time
Your time and resources are limited in today’s fast paced business world. Outsourcing will allow you to concentrate on your core business. Your valuable time should be spent on business development and managing your day-day job operations, not on day-to-day accounting tasks.
Offloading frustrating tasks can facilitate your ability to take on more projects and challenges onsite. Why spend daily time staring at spreadsheets, inputting daily invoices, preparing certified payroll, gathering time cards, paying invoices or reconciling cash, when you can free yourself and put more time towards the parts of the business you know and love?
A successful outsourcing team will be able to provide you accurate and reliable information in real-time. This will increase your visibility into the financial health of your business. The benefit to you will be confidence in your records and peace of mind!
Choose the Right Level of Accounting Support
If a small business is preparing its own accounting records, chances are that the person in charge of accounting tasks isn’t properly trained in all areas of transactional work. Someone on staff may have a background in accounting but is that your core competency?
Depending on your company’s needs and volume, you will get the benefit of having multiple levels of staff with expertise in accounts payable, accounts receivable, and payroll. Companies that outsource often lower your total costs by eliminating the need to hire numerous employees who need training, benefits, and access to software and hardware supplies. The outsourcing team will also provide best practices and controls on your records, and a process that is outlined and clear. This will ensure that your records are up-to-date at all times and you are meeting all compliance filing necessary to be in good standing.
Examples of accounting software platforms smaller contractors who are single person offices use include:
*Construction accounting and job costing software that offers fully integrated accounting functionality (A/R, A/P, Change Orders, Purchase Orders, Subcontract Orders, and more, including integrated payroll processing). QuickBooks is an accounting only system that lacks true job costing features that the others above provide, it also lacks the audit trail and controls that are seen as important by lenders and insurers.
Outsourcing can also aid in the growth of your company. Your back office team can assist more efficiently with surges in activity from seasonal work or a project based task rather than hiring additional short-term employees or overwhelming your internal staff. The levels of accounting staff needed will increase as your company grows.
Typical project-based assistance includes:
Budgeting and forecasting,
Cyber security review
Sales tax issues
ERP (Enterprise resource planning ) system implementation
Revenue recognition matters, debt and equity financing
Research and development
Additionally, outsourcing allows companies to free your own staff from mundane day-to-day accounting operations and redeploy them for work that brings in more business or adds value to your clients..
Interim management services is another great benefit of outsourcing. With a diversified team, your back office is able to address your interim management needs for all roles, from accounting/finance managers to CFOs, ensuring the continuity and integrity of your accounting, finance, and business operations. Back office staff require limited onboarding time and actively assist in identifying a permanent replacement, interviewing candidates and on boarding, ensuring a seamless transition.
Examples of interim management services that often benefit small and midsized contractors include:
Bookkeeping (A/R entry, A/P entry, Bank Reconciliation)
With accounting being one of the most vital functions in your organization, communicating your financial and economic information internally and externally opens up long term growth and development. Partnering with professionals who can support your accounting, operational, and system’s needs and processes will help you to increase your financial fluency, build your credibility with larger contractors and open doors to larger opportunities down the road.
Is it time to strengthen your accounting and technology systems and support?
For more information about Dawn's services and Marcum LLP please contact Cary Kimmel.
Dawn Meeker is a Director in the Firm’s CFO and Controllership Advisory Services department in the New Haven, Connecticut office. She has over 25 years of experience in both public and private accounting. Her area of expertise is in providing accounting and consulting services to companies. She is adept at advising clients on the appropriate systems implementation of accounting software; and also manages the training of staff on these systems.